The Dj Vu Card Company offers greeting cards for every occasion at unmatched prices. The following information

Question:

The Déjà Vu Card Company offers greeting cards for every occasion at unmatched prices. The following information comes from Déjà Vu’s accounting records for December of the most recent year:
Greeting cards sold .... 100,000 cards
Selling price ...... $1.00 per card
Fixed costs:
Manufacturing ....... $0.30 per card
Marketing & administrative . $0.21 per card
Variable costs:
Manufacturing ...... $0.15 per card
Marketing & administrative . $0.08 per card

Required:
Déjà Vu has an extra stock of 5,000 holiday greeting cards. The company is considering two options:
(1) Holding a 50% off sale and
(2) Holding an 80% off sale. Déjà Vu expects to sell 1,500 cards if it holds a 50% off sale and 4,000 cards if it holds an 80% off sale. The remaining cards would be discarded. Which option should Déjà Vu pursue?

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Related Book For  book-img-for-question

Managerial accounting

ISBN: 978-0471467854

1st edition

Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin

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